Worker shortages, seasonal factors change push U.S. weekly jobless
claims back to 53-year lows
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[April 08, 2022] By
Lucia Mutikani
WASHINGTON (Reuters) - The number of
Americans filing new claims for unemployment benefits fell last week,
indicating a further tightening of labor market conditions heading into
the second quarter, which could contribute to keeping inflation
elevated.
Part of the decline in claims back to a more than 53-year low touched in
mid-March reflected a revision of the seasonal factors, the model that
the government uses to strip out seasonal fluctuations from the data.
During the COVID-19 pandemic, the Labor Department switched to additive
factors to seasonally adjust the initial and continued claims data from
multiplicative factors, which economists had complained were less
reliable because of the economic shock caused by the coronavirus crisis.
"Now that most of the large effects of the pandemic on the unemployment
insurance series have lessened, the seasonal adjustment models are once
again specified as multiplicative models," the Labor Department said in
a statement on Thursday. "Statistical tests show that the unemployment
insurance series should, in normal times, be estimated
multiplicatively."Initial claims for state unemployment benefits dropped
5,000 to a seasonally adjusted 166,000 for the week ended April 2.
Claims were at this level during the week ending March 19, which was the
lowest since November 1968.
Seasonal factors back then were much different from now, making it
difficult to make comparisons. Economists polled by Reuters had forecast
200,000 applications for the latest week.
The government also revised claims data from 2017 through 2021, which
showed the level of filings much lower last year. The switch back to
multiplicative factors pushed applications down by about 20,000-40,000
for the recent weeks. Claims hit a record high of 6.137 million in early
April 2020.
The government said it would use a hybrid of multiplicative and additive
seasonal factors while the pandemic remains within the five-year
revision period. Multiplicative seasonal factors are assumed to be
proportional to the level of filings while additive factors are not
affected.
"The message from these volatile and revision-prone data continues to be
that the labor market is very tight by most historical standards," said
Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
A severe shortage of workers is keeping layoffs low and boosting hiring.
Worker demand is being driven by a sharp decline in COVID-19 infections,
which has resulted in restrictions being lifted across the country.
There were big declines in claims in Michigan and Texas, which offset
increases in California, Ohio and Pennsylvania.
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People line up outside a newly reopened career center for in-person
appointments in Louisville, U.S., April 15, 2021. REUTERS/Amira
Karaoud
Stocks on Wall Street were trading lower. The dollar was steady against a basket
of currencies. Prices for longer-dated U.S. Treasuries fell.
NEAR RECORD JOB OPENINGS
There is no sign yet that the Russia-Ukraine war, which has pushed gasoline
prices above $4 per gallon, has impacted the labor market. Nonfarm payrolls
increased by 431,000 jobs in March, the government reported last Friday.
March marked the 11th straight month of job gains in excess of 400,000, which
pushed the unemployment rate to a fresh two-year low of 3.6%. The jobless rate
is just one tenth of a percentage point above its pre-pandemic level.
With a near record 11.3 million job openings on the last day of February, the
scarcity of workers is forcing companies to boost wages, which is contributing
to high inflation.
While the claims report also showed the number of people receiving benefits
after an initial week of aid increased 17,000 to 1.523 million during the week
ended March 26, the trend in the so-called continuing claims remained low.
"This was just a modest move up from the revised reading for the week ended
March 19 that currently stands as the low since the start of the pandemic," said
Daniel Silver, an economist at JPMorgan in New York.
Minutes of the Federal Reserve's March 15-16 meeting published on Wednesday
showed policymakers observed that "demand for labor continued to substantially
exceed available supply across many parts of the economy," and "that various
indicators
pointed to a very tight labor market."
The U.S. central bank last month raised its policy interest rate by 25 basis
points, the first hike in more than three years. Wednesday's minutes appeared to
set the stage for hefty rate increases down the road.
Job openings far outpace the number of unemployed, illustrating the hiring
challenges companies are facing. There were 6.0 million officially unemployed
people in March.
The resulting strong wage growth is providing some cushion for consumers
battered by soaring prices, with annual inflation rising at its fastest pace in
40 years.
"The job market is strong, giving consumers a break from inflation and
geopolitical concerns," said Scott Murray, an economist at Nationwide in
Columbus, Ohio. "Open positions and fewer layoffs point to solid economic
growth.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)
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